Court Grants Divorce Request of Smilegate Founder Hyukbin Kwon... Record 2.5 Trillion Won Asset Division

35% of Smilegate Shares and 65 Billion Won in Cash to Be Awarded
Asset Division Totals About 2.55 Trillion Won
Significantly Exceeds Chey Tae-won and Noh So-young’s 944 Billion Won Settlement
Court: “Both Parties Equally Responsible for Mar

In the divorce lawsuit of Hyukbin Kwon, Founder and Chief Visionary Officer (CVO) of domestic game company Smilegate, the court has ordered that approximately 2.55 trillion won worth of assets be divided and allocated to his spouse. The asset division consists of 35% of Smilegate shares and 65 billion won in cash.

Hyukbin Kwon, Founder and Chief Visionary Officer (CVO) of Smilegate. Photo by Yonhap News

On September 9, the Seoul Family Court’s Division 3 of Family Affairs (Presiding Judge Jeong Donghyuk) ruled in favor of the plaintiff in a divorce and asset division lawsuit filed by Mr. Lee, the spouse of CVO Kwon. However, the court dismissed Mr. Lee’s claim for consolation money.

The court stated, "After examining the prolonged history of conflict between the plaintiff (Lee) and the defendant (CVO Kwon), the escalation of their disputes, and the possibility of reconciliation, the marriage has been irreparably broken down." The court also determined, "Both the plaintiff and the defendant share equal responsibility for the breakup." Based on this, the court found that there was 'a serious reason making it difficult to continue the marriage' pursuant to Article 840, Clause 6 of the Civil Act.

The key issue in the asset division was whether CVO Kwon’s shares in Smilegate should be included among the assets subject to division. The court decided to include Smilegate shares, considering the company’s founding and growth process, the fact that Mr. Lee had held some shares in Smilegate’s predecessor or had served as a director or representative director, and that Lee was responsible for household and child-rearing duties for an extended period.

Regarding the valuation of shares, the court applied the discounted cash flow method, taking into account that Smilegate is a game company and has strong prospects for future growth. The court found it appropriate to assess the value as of just before Smilegate merged four of its subsidiaries.

The court set the asset division ratio at 35% for Lee and 65% for CVO Kwon. The higher proportion allocated to CVO Kwon was attributed to his decisive role in the establishment and management of Smilegate, and that his personal business acumen and managerial decisions were critically important to the company's growth.

However, the court also took into account the economic support provided by Lee’s family during the company’s early days, Lee’s contribution to company management and domestic affairs and child-rearing, and the fact that CVO Kwon received a large dividend from Smilegate after the lawsuit was filed. In addition, the valuation of Smilegate RPG—a Smilegate subsidiary—was recently assessed at a value higher than that calculated in the appraisal for this case; this was also considered in the judgment.

CVO Kwon’s net assets were evaluated at approximately 7.3375 trillion won. Of this, the value of Smilegate shares was assessed at about 7.1049 trillion won, which accounts for roughly 96.8% of the total. Based on the asset division ratio, the court determined the amount that Lee should receive is about 2.55 trillion won, to be paid in the form of both shares and cash. Specifically, approximately 2.4867 trillion won, corresponding to 35% of Smilegate shares, will be transferred, and the remaining amount, about 65 billion won, will be paid in cash.

The court recognized that, since most of CVO Kwon’s assets are comprised of Smilegate’s unlisted shares, it would be practically difficult for him to prepare the entire amount in cash without selling shares. The court also noted that as unlisted shares are not easily liquidated and given the associated costs and taxes, it would not necessarily be advantageous for CVO Kwon to pay the entire settlement in cash.

Furthermore, because CVO Kwon holds 100% of the shares in Smilegate, the court concluded that even after transferring part of the holdings to Lee, there was little risk that he would lose control of the company.

The asset division amount of approximately 2.55 trillion won far exceeds the 944 billion won recognized in the final appeal of the divorce between Chey Taewon, Chairman of SK Group, and Noh Soyoung, Director of Art Center Nabi. However, a key difference in this case is that the majority of the settlement has been ordered to be paid in Smilegate shares, rather than cash.

This content was produced with the assistance of AI translation services.